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Shale wave spreads with record wells outside US, led by China and Russia

11.18.2013  | 

Fracking in the UK will start next year, after the government lifted an 18-month moratorium imposed when a drilling company found it had accidentally caused earthquakes. Two utilities, Centrica Plc of Britain and GDF Suez SA of France, have bought stakes in the country’s drilling licenses.

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By Brian Swint and Nidaa Bakhsh
Bloomberg

A record 400 shale wells may be drilled beyond US borders in 2014, with most in China and Russia , according to energy consultants Wood Mackenzie Ltd. 

While that is a fraction of the thousands of shale wells drilled in the US, the number of rigs used onshore in Europe and the Asia-Pacific region has increased 10% over the past year, data compiled by oil services company Baker Hughes Inc. Most of those rigs are meant for shale, Bloomberg Businessweek reports in its November 18 issue.

“It’s likely there will be a revolution,” Maria van der Hoeven, executive director at the Paris-based International Energy Agency, said in an interview in London. “But not everywhere at the same time. And you just can’t copy the US experience.”

Fracking in the UK will start next year, after the government lifted an 18-month moratorium imposed when a drilling company found it had accidentally caused earthquakes. Two utilities, Centrica Plc of Britain and GDF Suez SA of France, have bought stakes in the country’s drilling licenses to help bankroll the drillers and win a cut of any profit.

“History repeats itself, yes, but nothing is ever the same,” said Christof Ruehl, chief economist at BP Plc in London. “There’s going to be developments outside the US and North America which will be big and important, no doubt. But it will take some time.”

Shale boom

The shale boom has moved the US closer to energy independence, added jobs, helped revive manufacturing, and lowered gas bills. Yet the conditions that fostered the US’ success do not exist in Europe and Asia. In some countries, landowners do not own the oil and gas in the ground: the state retains all mineral rights. Or a country may levy much heavier taxes than the US on oil and gas profits.

Once they start fracturing, though, countries such as China , Argentina, and Russia could experience new oil and gas booms.

China has the largest shale gas reserves, estimated at 1,115 Tcf, followed by Argentina at 802 Tcf. In shale oil, Russia tops the list with about 75 billion barrels, according to a report by the US Energy Information Administration. Australia, Poland and Algeria all have big potential.

Argentina may be the first to capitalize on its shale resources with production expected as early as 2015, according to research by BCG, the Boston Consulting Group.

Oil players

Fracturing outside the US is likely to be good for the big oil players. Royal Dutch Shell Plc teamed up with China National Petroleum Corp. this year to explore in Sichuan, the province that accounts for 40% of China’s shale reserves. Hess Corp. is exploring with CNPC in the western Xinjiang region. YPF SA, the Argentine oil company, has joined with Chevron Corp. and Dow Chemical Co. to tap deposits in the south American country’s vast Vaca Muerta formation.

“Within three to five years, there should be exponential growth in drilling as there was in the US,” Edward Morse , head of commodities research at Citigroup Inc., said in an interview. “The big problem isn’t replicating the geology; it is replicating the critical ingredients that got the American shale revolution going.”



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nassereddin eftekhar
11.19.2013

A realistic article! Well, within five years from now one is wondering how big the "shift" in geographical world of O&G would be?

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